Although it mostly slipped past the press, the Iowa General Assembly passed a light-night bill just before they adjourned for the year. The standings bill is traditionally passed at the very last minute of every session, and includes lots of bills that did not quite make it during regular session. This year, the standings bill included Senate File 478, which brings two interesting changes interesting changes. On May 27, 2009, Iowa Governor Culver signed the bill into law.

First, the jurisdiction of the Iowa Workers’ Compensation Commissioner was expanded to include injuries for a worker who is domiciled in the State of Iowa and whose employer has a “place of business” in the State. That would include workers who live in Iowa and work for a trucking company, who mostly drive in other States.

The advantage is that some portions of Iowa law are seen as more worker-friendly than  some other States.

Second, Administrative Law Judges for the Iowa Workers’ Compensation Commissioner could assess penalties against employers and insurance carriers for failure to pay workers’ compensation benefits when due, unless they had some reason for not making the payments, under Section 86.13 of the Iowa Code. The penalty awarded at hearing can be up to 50% of the amount of accrued benefits which have not been paid. However, up to now the carrier could issue a general denial, sometimes without an investigation and without giving any reason for the denial. They could then hope that no litigation followed, or that a reason surfaced later. At that point, they could make an investigation and look for a reason for the denial. The law now requires an investigation before the denial, and appears to require that the carrier articulate the reason for the denial, at the time that the claim is denied. After-the-fact explanations may not be sufficient to defend against a claim for penalty benefits.

The legislation, now signed into law, seems to require that the employer and insurance carrier prove that an appropriate investigation was carried out, and provided a legitimate basis for denying benefits.

Likewise, if an employer refuses to turn a claim in to a workers’ compensation carrier, that could establish a prima facie case for penalty benefits, since no investigation has been undertaken and no reason given for the refusal to pay benefits as they accrue.